The following is the Politico Morning Tax update on tax extenders for 10/28/14:
The election is next week, which means we will soon finally learn what Congress plans to do with the raft of expired tax breaks known as the extenders. Lawmakers have been postponing work on them all year, and now that the lame duck is approaching, speculation is ramping up. Of course, Democrats will remain in control of the Senate for the rest of this year whatever voters decide next week.
Ways and Means Chairman Dave Camp, along with his likely successor, Paul Ryan, have been pushing to make at least some of the provisions permanent. That would make it easier to finance tax reform because it would be that much less that they’d have to offset. But that’s going to be a tall order. For one thing, it’s not obvious what Republicans could offer Democrats in exchange. Maybe they propose permanently extending some of Democrats’ favorite provisions, like the American Opportunity Tax Credit. But that would balloon the budget costs, and that’s one of the main reasons Democrats don’t want to make the extenders permanent in the first place. What’s more, Camp has made substantive changes to some of the extenders and senators are unlikely to wave those through without debate. And if Democrats, who want a mostly status-quo extension, lose control of the Senate, they’ll probably be in no mood to cooperate. They could threaten to punt the issue into the next Congress, leaving it for Republicans to sort out in January — by which time businesses, the IRS and others would be howling for action.
In the meantime, Senate Finance Committee Chairman Ron Wyden has begun asking colleagues what sort of non-controversial provisions they’d like to see added to the extender package. “Non-controversial” can be in the eye of the beholder, and Republicans fear the bill could become a Christmas tree. There won’t be any final decisions on what to do until after the elections, and they’ll likely be made by the White House and Senate Majority Leader Harry Reid, Minority Leader Mitch McConnell and Speaker John Boehner.